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Corporate Tax 2020 Eighth Edition Corporate Tax 2020 Eighth Edition Contributing Editor: Sandy Bhogal Global Legal Insights Corporate Tax 2020, Eighth Edition Contributing Editor: Sandy Bhogal Published by Global Legal Group GLOBAL LEGAL INSIGHTS – CORPORATE TAX 2020, EIGHTH EDITION Contributing Editor Sandy Bhogal, Gibson, Dunn & Crutcher UK LLP Head of Production Suzie Levy Senior Editor Sam Friend Sub Editor Megan Hylton Group Publisher Rory Smith Chief Media Officer Fraser Allan We are extremely grateful for all contributions to this edition. Special thanks are reserved for Sandy Bhogal of Gibson, Dunn & Crutcher UK LLP for all of his assistance. Published by Global Legal Group Ltd. 59 Tanner Street, London SE1 3PL, United Kingdom Tel: +44 207 367 0720 / URL: www.glgroup.co.uk Copyright © 2020 Global Legal Group Ltd. All rights reserved No photocopying ISBN 978-1-83918-061-3 ISSN 2051-963X This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations. The information contained herein is accurate as of the date of publication. PREFACE his is the eighth edition of Global Legal Insights – Corporate Tax. It represents the views of a group of leading tax practitioners from around Tthe world. One consistent trend across each jurisdiction is the evolving nature of tax rules which impact cross-border arrangements, and the ongoing uncertainty that this creates. BEPS implementation is now well into the domestic implementation phase and transfer pricing is now a mainstream aspect of tax planning. We also see renewed effort to reach an international consensus on taxation of the digital economy, with increasing concern that further delay will prompt unilateral domestic action across the OECD. This has prompted reaction from the US government in particular, and it was recently announced that the US would not be taking part in negotiations relating to ‘Pillar One’ – which broadly proposes changes to traditional nexus rules for allocating taxing rights, enabling a portion of the revenue generated from digital services to be taxed in the jurisdiction in which they are used. The US stated that they were stepping away from talks as the OECD was not making headway on a multilateral deal on digital services taxation. In addition, tax compliance and information reporting are entering a new phase, as DAC 6 will be implemented across the EU. The impact of COVID-19 will inevitably add to the complex international tax landscape. The long-term impact of the lockdown restrictions and the fiscal measures taken by governments worldwide remains to be seen; however, it is likely that tax policy will play an important role in revitalising the economy. Authors were invited to offer their own perspective on the tax topics of interest in their own jurisdictions, explaining technical developments as well as any trends in tax policy. The aim is to provide tax directors, advisers and revenue authorities with analysis and comment on the chosen jurisdictions. I would like to thank each of the authors for their excellent contributions. Sandy Bhogal Gibson, Dunn & Crutcher UK LLP Ireland Andrew Quinn, Lynn Cramer & Niamh Cross Maples Group Overview of corporate tax work over the last year Financial services Ireland is a leading European jurisdiction for the establishment of bond-issuing special purpose vehicles (“SPVs”), securitisation companies. In 2019, the Irish share of the number of Euro area “Financial and Vehicle Corporations” (“FVCs”) was 27.6%. FVCs are bond- issuing companies required to report to the European Central Bank. Ireland is also a leading domicile for internationally distributed investment funds. In 2019, the total funds assets under management in Ireland was €5.2 trillion, with the number of funds domiciled in Ireland being 7,707 and approximately €2 trillion held in these Irish domiciled funds. Mergers and acquisitions 2019 was another strong year for M&A activity in Ireland with deals encompassing an Irish aspect totalling $44.5 billion, while M&A activity abroad rose 51% to $16.3 billion. Aircraft leasing and aviation finance Ireland is a global centre for aircraft leasing with over 50 aircraft leasing companies based in Ireland, including 14 of the world’s top 15 lessors. Over the past 10 years, the commercial aviation industry has enjoyed sustained growth. However, 2020 is expected to be a challenging year for this industry worldwide as travel restrictions introduced as part of the response to COVID-19 have severely restricted operations. Intellectual property Ireland is a leading location for the development, exploitation and management of intellectual property (“IP”). According to IDA Ireland, the number of global companies centralising their IP management in Ireland has made Ireland one of the largest exporters of IP in the world. Eight of the top 10 global technology companies, eight of the top 10 global pharmaceutical companies and 15 of the top 25 medical devices firms in the world are located in Ireland. In recent years, Ireland has attracted a range of innovative social media companies, including Google, Facebook, Twitter and LinkedIn, all of whom have established substantial operations in Ireland. Tax disputes 2019 was a significant year for Ireland in the area of tax disputes. The Tax Appeals Commission (the “TAC”), which was newly reconstituted in 2016, made progress in dealing with a backlog of cases. The TAC closed 1,584 appeals during 2019 with the quantum of monies involved amounting to approximately €665 million. One hundred and twelve hearings are scheduled for 2020 with further hearings to be added during the year. As such, this represents a significant area of work for Irish tax practitioners. GLI – Corporate Tax 2020, Eighth Edition 74 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Maples Group Ireland Of particular note are the developments in the Perrigo tax case over the past year. This case arose out of a €1.64 billion assessment issued by the Irish Revenue Commissioners (“Revenue”) in 2018 against Perrigo Company plc. In February 2019, Perrigo brought proceedings in the Irish Commercial Court seeking judicial review of the decision by Revenue to raise that assessment. Those judicial review proceedings were heard remotely during the COVID-19 restrictions and at the time of writing, judgment on the case is awaited. The EU General Court determined on 15 July 2020 that Ireland did not give Apple illegal State Aid, so overturning the European Commission decision. This ruling may be appealed by the European Commission to the European Court of Justice. Key developments affecting corporate tax law and practice COVID-19 pandemic response At the time of writing, Revenue has issued guidance on many tax issues arising from the COVID-19 pandemic and the restrictions introduced to reduce the spread of the disease. Among the measures introduced by Revenue are the following: • The suspension of the application of a surcharge for late corporation tax return filings for accounting periods ending June 2019 onwards. The late filing will also not trigger any restriction of reliefs, such as loss relief and group relief, as would ordinarily be required. • The suspension of Revenue’s debt collection and accrual of interest on late payments for the January–June Value-Added Tax (“VAT”) periods and February–June pay-as- you-earn (“PAYE”) (Employer) liabilities 2020. • The filing deadline for all 2019 share scheme returns has been extended from 31 March 2020 to 30 June 2020. • The 90-day employer filing obligation applicable to the Special Assignee Relief Programme (“SARP”) has been extended for a further 60 days. • Cross-border workers relief will not be affected by employees being required to work from home in Ireland due to COVID-19. Similarly, Revenue will not enforce Irish payroll obligations where an employee relocates temporarily to Ireland during the COVID-19 period and performs duties for their employer from Ireland. • Revenue will not strictly enforce the 30-day notification requirement for PAYE dispensations applicable to certain short-term business travellers. • PAYE exclusion orders will not be adversely affected by an employee working more than 30 days in Ireland as a result of COVID-19. • For the purposes of Irish tax residency rules, where a departure from Ireland is prevented due to COVID-19, Revenue will consider this force majeure for the purpose of establishing an individual’s tax residence position. • For the purposes of corporate tax residence, Revenue will disregard presence of employees, directors, service providers or agents in Ireland or outside Ireland resulting from COVID-19-related travel restrictions. In these circumstances, Revenue has advised that the individual and company should maintain a record of the facts of the bona fide relevant presence in or outside Ireland. • Following the adoption of Council Directive (EU) 2020/876 which allowed for the deferral of the exchange dates for DAC2, and the filing and exchange dates for DAC6, Revenue has confirmed that the deadline for filing DAC2 returns in respect of the 2019 reporting period is now deferred until 30 September 2020. This deadline will also apply for the filing of Common Reporting Standard and Foreign Account Tax Compliance Act returns. Finally, DAC6 reporting deadlines have been deferred by six months. GLI – Corporate Tax 2020, Eighth Edition 75 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Maples Group Ireland • Importation of goods to combat the effects of COVID-19 from outside the European Union (“EU”) without the payment of Customs Duty and VAT from 20 January 2020 to 31 July 2020.
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